Sometimes the idea of utilizing real estate redemptively can feel a bit squishy, hard to define, or even theoretical. We hope to provide real-life examples of how this can be applied.
Recently, we had a resident who was up for a lease renewal. They were well below market rent in their current apartment. This particular resident had an inoperable bathtub for three months prior to us purchasing the property and we had invested heavily in renovating their bathroom and others on the property to ensure residents are receiving quality housing.
Standard practice in real estate is to raise the rent to compensate for renovations. A rental increase is applied to recoup the renovation expense or create a situation where the resident chooses alternative housing (moves somewhere cheaper). We believe there are other alternatives to create a path forward for the resident. When we believe that people are deserving of respect and dignity, our actions change. We realize that our decisions have real-life consequences on real-life people who are often just trying to get by.
We started by having an open conversation with our property manager, whom we chose because of her competency, compassion, communication, and connection to the local community. Through the help of the property manager, we sought to understand this resident’s particular situation. Together, we developed a couple of options that we hope are manageable and mutually beneficial. We communicated openly and transparently with our resident and communicated our desired rent increase and new provisions in the lease regarding a utility bill back. Through dialogue, we were able to come to an agreement to gradually make these changes over the next 12 months in order to allow our resident to adapt to the new expenses and budget appropriately.
Our aim is to participate in long-term flourishing for the resident, for the broader community and for our financial partners. By choosing to prioritize long-term well-being we can make decisions that are not one sided but positively impact all parties.
The resident’s rent is going to have to increase, we are investing in this community, and we know they will see and experience those improvements. We are not going to “maximize returns” in a quick one-two punch. We are taking a slower path that leads to reasonable returns for our financial partners but is also sustainable for our residents.This is just one example of how we can balance compassion with business. As we continue on this journey, we remain dedicated to people and places and seeing them flourish.
We invite you to learn more about our approach and how we implement these principles in our work.
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Enriching Communities through Redemptive Real Estate,
Easton Garcia
Sovereign Sage
Director of Redemptive Real Estate and Community Innovation
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